The Barter System
Instead of writing a check or whipping out your credit card for your next business purchase, have you considered bartering for that product or service? Companies do it, individuals do it, and the frequency of barter as a payment method is growing.
The barter system has been around since the beginning of time and can be historically dated all the way back to 6000 BC. The earliest written records of a barter system are when it was introduced by the Mesopotamian culture, where people exchanged goods or services without a consistent medium of exchange. In other words, currency – they didn’t use money.
At this time, goods were exchanged for food, tea, spices, weapons, and salt – with salt being the most popular good. In fact, salt was considered to be so valuable that Roman soldiers were paid in bags of salt. Another fact – the word “salary” is derived from the Latin word for salt, which is “sal”.
In colonial times in the US, barter was used extensively in order to exchange fur, silks, wheat, and perfumes, even though currency was widely available. Even when a standard currency platform became available, however, bartering did not end; it just became more organized.
Today the barter system still exists regardless of the existence of currency. In 2011, there were over 450,000 companies in the US alone that participated in organized barter exchanges to gain $12 billion in assets. As an example, Honda, Kia and Subaru have bartered cars for media trade credits. In another example, Lufthansa has bartered real estate for media credits and aviation fuel.
In countries beset by rampant inflation, or other unpredictable economic factors, barter is preferred by many businesses and individuals, as opposed to getting payment in what might be a volatile currency.
There are many, many commercial companies that will arrange barters on behalf of business entities; we will leave that up to the business owners as to which one suits their needs in this arena.
Coming back to both the US and the individual, companies like Time Banks USA (headquartered in the DC area, just like our company) are the glue of the barter system. The premise behind Time Banks is to join neighbors and communities to help bring people together by sharing their talents and expertise. Time banking uses time and labor as a medium of exchange for services that are being traded. Time banking is mainly used to provide incentives and rewards for work such as mentoring children, caring for the elderly, work usually done on a volunteer basis, which the market tends to devalue. The “time” an individual spends providing these types of services earns “time” that one can spend to receive other services.
To illustrate how this works in the real world, Dana Nolan, from Ohio, used Time Banks for needed repairs done on her deck that were estimated by several contractors to cost around $10,000. Many of us would think that $10,000 is a lot of money, and is way out of our budget – so did Dana. However, she found a way to get all of her repairs done for only $300.
Yes, that’s right, Dana was able to get $10,000 worth of repairs for only $300 in cash, meaning she only paid for the raw materials.
Now, many of us are thinking, “How is this possible when the cost of labor is going up every day”?
It’s certainly a valid question.
Dana joined Time Banks USA, a nonprofit organization, that allows people to provide their time and expertise in return for services, in her local area. She assisted many individuals with tasks like fixing up their resumes, she worked with many local charities and participated in fundraisers, shebaked goods, etc. In return, Dana was able to receive free help and labor from other locals who are part of Time Banks USA by redeeming her time credits in this modern-day barter system.
Organizations like Time Banks are a great way for not only for underemployed individuals, but, also for those individuals who are older and living on a fixed income to give back to the community in exchange for help. There are over 361 participants of Time Banks in the DC Metro Area itself and there are many other locations of Time Banks chapters around the country.
There are social gains to be had as well. A survey of participants at Time Banks was done, and it was found that 90% of participants had made new friends through Time Bank activity, 71% saw those friends at least once a week, and 42% saw their Time Bank friends a few times a week. Members reported that they felt more a part of a community, and their trust of others had increased – especially of other people who were different from them.